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Melbourne retiree Brenda Duke and her husband Brian, both 82, despised living in a retirement home.
While they were surrounded by people their own age, they couldn’t shake the feeling they weren’t part of a proper community. One where they could easily pop in to say hi to their neighbours or interact with people in their 20s or 30s.
Brian and Brenda Duke, 82, recently moved from a retirement home into a build-to-rent development in Caulfield. Credit: Darrian Traynor
But instead of snapping up a modest house on a quiet suburban street, the pair opted to rent a two-bedroom apartment two blocks from Monash University’s bustling Caulfield campus and the local train station.
“We thought, why bother to buy again when we can rent?” Brenda said. “We love everything about it. It just felt like home straight away.”
The Dukes chose a build-to-rent project, a model under which developers maintain the ownership and management of apartment buildings with the aim of securing rental profits in the long term. And they aren’t alone.
With 1600 units, Melbourne is home to more than half of the country’s completed build-to-rent developments, according to a recent analysis. Global real estate firm JLL found that, as of last month, the city wasn’t likely to lose that title any time soon with a further 7100 units either under construction or having already secured planning approvals.
While rent is typically 10-20 per cent more expensive, build-to-rent developers cite rooftop dog parks, communal dining rooms and long-term leases as factors that contribute to residents’ wellbeing.
Monash University student Gandewa Sanders, one of the Dukes’ neighbours at Realm Caulfield, chose the build-to-rent model over student accommodation because of the extra amenities.
“I don’t have to travel to exercise or clear my head while I’m doing my masters homework,” he said, adding that he had met other students while studying in the building’s common areas.
Treasurer Tim Pallas described Victoria’s supply of build-to-rent apartments as a “real winner” for renters searching for quality homes.
“We recognised build-to-rent’s potential early on because it creates more housing options for Victorians,” he said. “It’s great that the Albanese government has come on board with further incentives.”
The Victorian government announced tax concessions for long-term rental developments in 2020 and Pallas hasn’t ruled out further incentives ahead of a highly anticipated suite of housing reforms due to be unveiled later this year.
Eligible projects so far receive a 50 per cent reduction on land tax and a full exemption from what’s known as the absentee owner surcharge for up to 30 years.
In last month’s federal budget, the Albanese government reduced the tax rate of managed investment trusts that contribute to build-to-rent developments. Overseas investors are the primary funding source for Australia’s build-to-rent industry.
Caulfield North IT worker Tracey Pace, who has lived in Realm for about three months, said she was excited about the trend influencing the wider rental market – including public housing.
“We have the security that at the end of the 12 months the landlord isn’t going to up and sell,” she said.
“And coming out of the pandemic, that sense of community, I think that’s really important.”
The head of HOME apartments – another build-to-rent provider – agreed.
“I think build-to-rent is here to stay as part of Melbourne’s housing mix,” Christian Grahame said. “In the years to come, we’ll see a range of different customer offers, some aimed at the more luxurious end and others aimed at the more affordable end.”
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